Analysts say the escalation diminishes chances of negotiations between the leaders of the world’s two largest economies, but other regional leaders seized on Trump’s suggestion he might be open to cutting deals, despite his previous insistence that he was not interested in discussing exemptions to his tariffs.

Amid the ongoing uncertainty, shares in Australia, Japan and South Korea opened lower on Friday.

Japan’s Nikkei-225 fell by more than 2 percent and the Topix by almost 3 percent when trading opened in Tokyo, with automakers including Toyota and Honda particularly badly hit, each down more than 5 percent Friday morning, after Trump introduced a 25 percent tariff on all foreign-made cars and car parts.

Australia’s ASX-200 declined almost 2 percent in early trading Friday and South Korea’s KOSPI lost 1.15 percent, although it quickly recovered. Trading in China and Hong Kong was closed on Friday for the Tomb Sweeping Day holiday.

In the U.S. on Thursday, stocks closed down sharply, with the tech-heavy Nasdaq falling close to 6 percent for the day and the S&P 500 notching its biggest one-day drop since summer of 2020, closing down 4.8 percent. The Dow Jones Industrial Average fell almost 4 percent.

On a day he branded “Liberation Day,” Trump on Wednesday announced a 10 percent tariff that would apply to imports from every country, and a separate set of what he called “reciprocal” tariffs that impose a higher country-specific rate.

These included a new tariff of 34 percent on Chinese goods, on top of the 20 percent levy already imposed as Trump accused Beijing of not doing enough to stop the flow of fentanyl and its precursors into the U.S. It is also in addition to existing tariffs on goods including some appliances, machinery and clothing that were already as high as 45 percent.

“Trade wars and tariff wars have no winners, and protectionism will lead nowhere,” Chinese Foreign Ministry spokesman Guo Jiakun said Thursday. “The U.S. needs to correct its wrongdoings and resolve trade disputes with countries, including China, through consultation with equality, respect and mutual benefit.”

Trump also closed the “de minimis” loophole that allowed items being shipped or brought into the United States that are worth less than $800 to circumvent import taxes, a move that will hit customers of Chinese e-commerce sites like Shein and Temu particularly hard.

Trump also slapped duties of 24 and 26 percent on Japan and South Korea, respectively — both are key U.S. security allies and major trading partners — and 32 percent on Taiwan, although he exempted its advanced semiconductors from the levies.

Trump also targeted many of the countries that had benefited from companies’ efforts to diversify supply chains away from China: Cambodia was stung with a 49 percent tariff, Vietnam with 46 percent, and Thailand, 36 percent.

While China vowed to retaliate, other major economies in Asia — including security allies Japan and South Korea — held out hope that they would be able to win exemptions through negotiations, even though Trump had repeatedly ruled out any appetite for cutting deals.

Taiwanese President Lai Ching-te said in a statement late Thursday that he was looking forward to “working closely with the U.S. to ensure a fair, mutually beneficial approach that strengthens our shared prosperity.”

But after U.S. markets closed down sharply Thursday, Trump told reporters on Air Force One that he would be open to striking deals with individual countries.

“Every country is calling us. That’s the beauty of what we do,” Trump said. “We put ourselves in the driver’s seat. If we would have asked these countries to do us a favor, they would have said no. Now they will do anything for us.”

Trump added: “The tariffs give us great power to negotiate. They always have.”